Monday Economic Report: Manufacturing Activity Slowed Significantly in June

AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report" from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).

By Chad Moutray, Ph.D., CBE – June 27 2022

NAM  Weekly Economic Toplines:

The S&P Global Flash U.S. Manufacturing PMI declined from 57.0 in May to 52.4 in June, the lowest reading since July 2020. Both new orders and output contracted in June for the first time in roughly two years, with global challenges, supply chain bottlenecks, workforce shortages and inflationary pressures weighing heavily on activity. Yet, there remains cautious optimism about production growth moving forward despite weakening for the third straight month.  At the same time, the S&P Global Flash Eurozone Manufacturing PMI decreased from 54.6 in May to 52.0 in June, the weakest reading since August 2020. The Russian invasion of Ukraine continued to impact activity negatively, with output contracting for the first time since June 2020 and new orders and exports deteriorating further. Manufacturing activity in the Kansas City Federal Reserve Bank’s district expanded at the slowest pace since December 2020, with the composite index declining from 23 in May to 12 in June. Hiring pulled back in June from May’s record pace but remained solid. The index for prices paid decelerated in June but remained very elevated. In their comments, manufacturers cited supply chain disruptions and soaring costs as significant challenges. According to Freddie Mac, theaverage 30-year fixed-rate mortgage was 5.81% in the latest data, the highest rate since the week of Nov. 26, 2008 (5.97%). It was 3.11% at the end of 2021, or roughly six months ago. Existing home sales fell 3.4% from 5.60 million units at the annual rate in April to 5.41 million units in May, declining for the fourth straight month to the slowest pace since June 2020. On a year-over-year basis, existing home sales fell 8.6% from 5.92 million units in May 2021. The median sales price was $407,600 in May, an all-time high and up 14.8% from one year ago. After falling sharply over the prior four months, new single-family home sales rebounded somewhat, rising 10.7% from 629,000 units at the annual rate in April to 696,000 units in May. Sales increased in the South and West but fell in the Midwest and Northeast. Single-family home sales have fallen 17.0% since December, with a 5.9% decline over the past 12 months.  According to the U.S. Energy Information Administration, the average price per gallon of regular gasoline in the U.S. for all formulations was $5.006 for the week of June 13, an all-time high and up from $3.275 at the end of 2021. The Index of Consumer Sentiment plummeted from 58.4 in May to 50.0 in June, the lowest reading on record, according to final data from the University of Michigan and Thomson Reuters. Americans continued to worry about inflation, with lingering economic uncertainties. READ FULL REPORT